Digital Garage, Inc.
2Q of FYE March 31, 2023 Financial Report＜2020-2025 Mid-term Plan＞

Designing our New Normal Context

2022.11.11

< Purpose >Designing “New Context” fora sustainable society with technology

Copyright © 2022 Digital Garage, Inc. All Rights Reserved2

CEOメッセージ

Introduction/CEO message
In our announcement last quarter, we put together a “Strategy
Overview” of ourstrategy we announced last year. It
was an attempt to reflect a more strategic and cross-segmental
perspective of the business from a medium-term view.
DG continues to follow the concept of Ambidexterity which has two
aspects, “defense, deepening existing businesses” and “offense,
creating new businesses.” We will follow this with our First
Penguin Spirit.
In our announcement this quarter, our business has been
progressing well despite of an unexpected impact on ourinvestment business caused by the global economic situation. We
will also explain the progress of our strategy including a new
business launch and a strategic partnership.
In addition, we will outline the initiatives aiming for non-linear
growth arising from web3 opportunities, and ESG.

Copyright © 2022 Digital Garage, Inc. All Rights Reserved

3Investment Highlights

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4

FY23.3 2Q Cumulative Financial Results Highlights
Financial Performance
Consolidated revenue and profit before tax decreased due to the absence of fair value gain/loss of Blockstream, one of
our portfolio companies. Consolidated profit before tax : - 6.6 B JPY（YoY -34.1 B JPY）
Profit before tax excluding gains/losses on investments grew steadily to 2.3 B JPY (+33.4% YoY)

TopicsLaunched a B2B payment service together with JCB as the first step of the Fintech Financial business in the
DG FinTech Shift strategy. Aiming to expand revenues from Fintech Financial business starting with thisbusiness.
Formed a capital and business alliance with Resona Holdings, which has a strong SMB customer base.
Expand B2B business by leveraging the assets of both companies.
Share repurchase limit of up to 5 B JPY (from 2022/11/14 to 2023/4/30)※SMB: Small and Medium-sized businesses
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

5Highlight 1 (Consolidated Revenue, Consolidated Profit before tax)
・FT/MT/LTI performed steadily. Profit before tax excluding gain/loss from investment grew by 33.4%.
・The reactionary decline in fair value gains/losses of investee company Blockstream affected Consolidated profit before tax.

Consolidated Revenue（Unit：M JPY）

40,10919,596

LTI

3,928

MT

7,360

FT

4,287

19,264

Consolidated Profit before tax

6,037
14,564

2,105

2,028

2,426

6,591

6,314

5,775

IT Segment+
Unrealized gains/losses of BS recorded in
Others/Adjustments and Eliminations+33.4%

4,042
4,749

5,191

（Unit：M JPY）

7,326

IT Segment+
Others/Adjustments
and Eliminations+2.1%

27,4255,618

FY20.3 2Q Cum. FY21.3 2Q Cum. FY22.3 2Q Cum. FY23.3 2Q Cum.

1,049

1,715

2,288

FY20.3 2Q Cum. FY21.3 2Q Cum. FY22.3 2Q Cum. FY23.3 2Q Cum.

-6,642
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

6

Highlight 2 (Profit before tax by Segment)
・ FT and MT are on track for full-year growth, with 2Q (Jul. – Sep.) profit up 16.8% and 48.8% YoY, respectively.
・ IT decreased profit due to the absence of gain/loss on valuation of portfolio companies. LTI increased profit by 19.9% YoY
thanks to the recovery of Kakaku.com.
(M JPY)

Profit before
tax

FT

FY 22.3
2Q Cum.

27,4252,228

FY 23.3
2Q Cum.

-6,642
2,430

YoY

Increase/Decrease-34,067+202

YoY% Change

Remarks-124.2%Business segments other than investment grew steadily,
although profit before tax decreased significantly due to theabsence of valuation gains/losses of Blockstream.

+9.1%

Profit before tax increased by 16.8% in 2Q (Jul. – Sep.) YoY withgrowth in transaction volume in both non-face-to-face and face-toface areas.
Profit before tax increased by 48.8% in 2Q (Jul. – Sep.) YoY andprogressed steadily toward the full fiscal year, although there was areactionary decline from the real estate projects recorded in FY22.3
1Q.

MT

431

372

-58

-13.5%

IT

15,522-963-16,485-106.2%

Profit before tax decreased due to the significant impact of thereactionary decline in fair value gains/losses of Blockstream.

LTI

1,078

1,293

+215

+19.9%

Profit before tax increased by 19.9% as Kakaku.com's
performance recovered as demand for food services began torecover.

Others/Adjustme
nts and
Eliminations

8,166-9,774-17,940-219.7%

Recorded valuation gains /losses on Blockstream securities held
directly by the Company.

※ Musubell business was reclassified from MT to LTI Segment from FY23.3. Results for the same period of the previous fiscal year were retroactively revised to reflect the change.
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

7

Highlight 3 (KPI)
・Strategic alliances with various companies in the area of a face-to-face settlement worked successfully, resulting in continued growth of settlementtransaction volume.
・Investment profit on equity method from Kakaku.com, Inc. increased as the restaurant industry recovered. Digital ads are steady, especially in thefinancial domain.
Segment

FY 22.3
2Q Cum.

FY 23.3
2Q Cum.

Increase/Decrease% Change

100 M JPY

20,63024,792+4,161+20.2%

Non-face-to-face

100 M JPY

16,451

18,767+2,316+14.1%

Face-to-face

100 M JPY

4,179

6,025

+1,846+44.2%

M JPY

15,744

15,480

-263

-1.7%

Financial

M JPY

9,130

9,351

+221

+2.4%

Investment Value

M JPY

61,49379,769+18,276-

Amount Sold

M JPY

3,235

642

-2,593-

Amount Invested

M JPY

4,332

1,607

-2,725-Investment profit on equity method from
Kakaku.com

M JPY

1,169

1,665

+496

+42.4%KPI

Unit

Transaction Volume
FT

MT

IT

LTI

Digital Ads Volume

YoY

YoY

Copyright © 2022 Digital Garage, Inc. All Rights Reserved

8

Overview of IT Segment Portfolio
・The fair value increased from end of FY22.3 despite a write-down of Blockstream in FY23.3 2Q.
・Risks are diversified as the fair value ratio of the top six companies in the overall portfolio decreased.
・Except Blockstream, more portfolio companies increased than decreased in both value and number of companies.

Trends in Fair value of IT Segment investees
779
150

798
53

（Unit：100 M JPY)

Blockstream
252

Top six

MX Technologies
GrubMarket

215

Sen Do Technology
Healthians

Others414

End of FY22.3

493

Droom
OthersEnd of FY23.3 2Q
Copyright © 2022 Digital Garage, Inc. All Rights Reserved9Accounting for fair value gains and losses of Blockstream
・Recorded in IT Segment or Others/Adjustments and Eliminations depending on which entity invested in Blockstream.
・DG Group saw a reactionary decrease of 42,218 M JPY on consolidated P&L from the previous fiscal year.

■ PL impact of fair value valuation of Blockstream
FY22.3 2Q Cum.

FY23.3 2Q Cum.
Revenue① IT/Direct investment① IT/Direct investment

12,851
855

Revenue in recurring business② IT/Fund investment

Share of profit of investments accounted
for using equity method

Finance income③ Others/Adjustments③ Others/Adjustments
and Eliminations
and Eliminations

10,188

Expenses⑥Others/Adjustments
Others/Adjustments⑥
andEliminations
Eliminations
andFinance costs-665

Profit before tax-7,967⑤ IT/Fund investment（Unit：M JPY）

④IT/Direct
IT/Directinvestment
investment④-9,693

FY22.3
2Q Cum.

FY23.3
2Q Cum.

YoY

23,893-10,358-34,251① 12,851④ -9,693-22,544② 855⑤ -665-1,519③ 10,188--10,188-

7,967+7,967-⑥ 7,967+7,96723,893-18,325-42,218

IT/Direct investment(①④) : Investment from DG Ventures, Inc., a consolidated sub

IT/Fund investment(②⑤) : Investment from DG Lab Fund I, an equity method affiliate

Others/Adj. & Elimi.

(③⑥) : Investment from Digital Garage, Inc.
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

10Quarterly Revenue (Excluding IT Segment and Others/Adjustments and Eliminations)・FT continues to grow with the expansion of the cashless payment market.
・In MT, digital ads, mainly in the financial sector, remain solid despite the impact of COVID and seasonality.
・LTI's restaurant-related businesses, including Kakaku.com’s Tabelog, are recovering from the impact of COVID.
One-time & Discountinued operation(LTI)

LTI

MT

FT

（Unit：M JPY）

8,705
7,691
6,556

6,708

7,036

1,740

3,053

3,390

8,071
7,633

7,202
1,351
1,642

1,506

7,884

2,245

1,256
1,389

1,244

6,970

3,705

4,311

7,129

6,476
460

3,984

7,306

993

1,357

906

3,335

3,257

2,958

3,499

6,767

6,766

907

994

3,217

3,098

3,087

1,406

7,521
1,146

3,618

6,893

6,926

1,246

1,181

2,927

2,848

3,526

3,376

2,083

2,204

2,184

2,138

2,340

2,409

2,525

2,392

2,516

2,675

2,814

2,757

2,721

2,898

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

2,953

1,763

1,812

1,838

2,034

1Q

2Q

3Q

4Q

FY19.3

FY20.3

FY21.3

FY22.3

FY23.3Copyright © 2022 Digital Garage, Inc. All Rights Reserved

11Segment

Segment Performance (2Q Cumulative)

・Revenue and profit before tax continued to grow with 8.2% YoY increase in revenue and 9.1% YoY increase in profit before tax.
・Business performance remained strong with growth in transaction volume in both non-face-to-face and face-to-face areas.

Segment Revenue
EC/DX business
PSP business

4,287
392

3,895

4,749
405

4,343

5,191
450

4,741

Segment Profit before tax（Unit：M JPY）
YoY
5,618 +8.2%

476

+5.8%

5,143

+8.5%

FY20.3 2Q Cum.FY21.3 2Q Cum.FY22.3 2Q Cum.FY23.3 2Q Cum.

（Unit：M JPY）
YoY

2,173

2,101

2,228

2,430

+9.1%

FY20.3 2Q Cum. FY21.3 2Q Cum. FY22.3 2Q Cum. FY23.3 2Q Cum.
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

12Segment

Trends in Settlement Transaction Volume

・Face-to-face settlement continues to grow at a high rate, and market penetration continues to expand steadily.
・Non-face-to-face settlement remains strong despite a rebound in Covid demand.
（Unit：100 M JPY）
Face-to-face settlement

12,133

Non-face-to-face settlement

10,545

10,482
9,768

8,962
7,281
6,278
485

6,660

8,124

8,333

692

1,091

1,794
1,688

1Q

2Q

2,902

3,123

+40.7%

11,585

2,549

2,219

1,476

8,752
6,126

2,746

12,424

586

534

5,793

1,960

10,14812,368YoY+22.4%

6,695

3Q
FY20.3

7,432

7,242

7,486

4Q

1Q

2Q

3Q
FY21.3

8,080

4Q

8,522

1Q

9,387

9,036

9,466

9,301

3Q

4Q

1Q

2Q

7,929

2Q
FY22.3+17.3%

FY23.3Copyright © 2022 Digital Garage, Inc. All Rights Reserved

13Segment

Trends in Number of Settlement Transaction

・The number of settlement transactions continued to grow by 22.5% YoY.
・Data volume of settlement transactions continued to grow, expanding Fintech Financial business base.
（Unit：M Transactions）
Face-to-face settlement
Non-face-to-face settlement

213
197
170
148
130

78
4
75

1Q

96
5

90
4

108
13

26

85

90

95

104

2Q

3Q

4Q

1Q

FY20.3

42

36

112

2Q

127

3Q
FY21.3

167
44

211

181
54

73

64

75

95

+49.5%

222

86

123

127

133

140

136

135

4Q

1Q

2Q

3Q

4Q

1Q

FY22.3242

YoY+22.5%

146

+9.6%

2Q
FY23.3Copyright © 2022 Digital Garage, Inc. All Rights Reserved

14

Segment

Segment Performance (2Q Cumulative)

・Although there was a reactionary decline from the large-scale projects recorded in the real estate advertising domain in FY22.3
1Q, the digital advertising business performed solidly, especially in the financial domain, where we have strengths in thesettlement business.

Segment Revenue

Segment Profit before tax（Unit：M JPY）
CRM, etc.

7,360

Real Estate

6,591
2,027
2,426

6,314
1,568

Digital Ads

5,775
1,406

YoY
-8.5%
-10.4%

1,004

3,345
2,277

1,988

（Unit：M JPY）

1,889

2,462

2,283

2,211

2,158

FY20.3 2Q Cum. FY21.3 2Q Cum. FY22.3 2Q Cum. FY23.3 2Q Cum.

YoY

-10.2%

-5.5%

431
256

372

-13.5%

FY20.3 2Q Cum. FY21.3 2Q Cum. FY22.3 2Q Cum. FY23.3 2Q Cum.
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

15

Segment

Segment Performance (End of Sep. 2022)

・Despite the write-down of Blockstream's fair value, the fair value at the end of September was 79.8 B JPY (+2.3% vs. the end of
FY22.3) due to the impact of the strong dollar.
Balance of Operational investment securities（Breakdown by Currency）（Unit：M JPY）
Others

79,769

INR

5,969

JPY
USD

61,493
2,126
10,861

40,585
1,501
10,05747,957

FY22.3 2Q

Europe0.2%

Others13.5%

14,033
Japan

North America

17.8%
58,869

46.6%

Asia

21.9%

28,233

FY21.3 2Q

Portfolio by Region

FY23.3 2Q
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

16

Segment

Segment Performance (2Q Cumulative)・Performance recovered mainly in Kakaku.com’s Tabelog business as demand for eating out began to recover.
・Core revenue, excluding one-time factors and discontinued operations, has recovered to the pre-Covid level.

Segment Revenue（Unit：M JPY）

3,928

Discontinued operation (NCS※)
Other
Investment profit on equity method

691
2,105
653

1,810

（Unit：M JPY）

One-time revenue

642

786

Segment Profit before tax

2,028
127

2,426

+19.7%

803

+8.5%

YoY

2,426

740

546
907

YoY

1,161

1,624

FY20.3 2Q Cum. FY21.3 2Q Cum. FY22.3 2Q Cum. FY23.3 2Q Cum.

+39.9%

1,078

1,293

+19.9%

605
FY20.3 2Q Cum. FY21.3 2Q Cum. FY22.3 2Q Cum. FY23.3 2Q Cum.

※ Transferred all operations of New Context Services, Inc. in FY21.3.
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

17

DG FinTech Shift

Copyright © 2022 Digital Garage, Inc. All Rights Reserved

18

DG FinTech Shift Strategy Overview
Ⅰ Business expansion utilizing the payment platform/Driving DG FinTech Shift strategy for further growth
Ⅱ Social implementation of next-generation technologies/Creating new businesses in areas that will
emerge non-linearly from technologies such as blockchain
web3/Crypto
relatedbusiness

Strategic joint
ventureNew platform utilizing a blockchain

MarketingDX business

FintechFinancialbusiness(DG invoice card payment)

Payment platform
Investment/Incubation
Payment platform(Tabelog order)

Expanding the portfolio of strategic businesses around the
Fintech area, which creates a competitive edge andcontributes to the growth of the payment business
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

19

DG FinTech Shift

Ⅰ Business Expansion Utilizing The Payment Platform

Copyright © 2022 Digital Garage, Inc. All Rights Reserved

20Overview of FT as the Foundation of DG FinTech Shift Strategy
・Streamlining the system infrastructure by integrating two PSP companies in Feb 2021
・Promoting initiatives such as strategic alliances and new business development
Major corporation
established more than
20 years ago

Merged in 2021

The investment costs for the integration of thesystem infrastructure of the two PSP companies
has been settling down

■Proactive strategic alliances with leading companies in the respective industries
Building a consortium of a vast network of merchants through alliances
Developing strategic alliances actively amidst entrance of foreign competitors and restructuring within theindustry.

■Entered offline payment market

Transaction volume for offline payment transactions achieved strong growth and the number of merchants has been increasing due
to alliances with strategic partners who are successful in the offline payment market■Multi-layered revenue streams and the competitive edge•••

(DGFT Invoice Card Payment)

Generating multi-layered revenue streams utilizing data. Aggregating diverse payments (approx. 50 methods) unique to Japan
Differentiating by developing not only Payment business but also Marketing/DX business and Fintech businessIn response to web3 up and rising, utilizing our payment platform to be a foundation which enables to implement new payment
methods into society.
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

21

Multi-layered revenue streams centered around payment
Aiming to become a platform that continuously generates stable revenue streams centered aroundthe payment business. In addition to primary and secondary revenue streams, aiming to create newrevenue opportunities, mainly utilizing data.
＜DG Revenue streams＞
Payment recurringbusiness

Primary revenue
streamPayment platform

DX businesses

Secondary revenue
streamPayment

Customer behavior
data – from awarenessto transaction
Attracting
customers

Marketing/DX businessDX /Cashless• Industry-specific DX service revenue• Marketing and CRM service revenues

Consumer• PSP (Payment Service Provider)service revenues

Businessowners(Merchant)• PSP service revenues

Data businessNew revenue stream

Fintech business• New financial services revenues• Next generation marketing• PSP service revenues

Payment/
Purchase data
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

22Launched B2B Payment Service together with JCB・Launched “DGFT Invoice Card Payment” which practically extend payment due dates byswitching invoice payments from bank transfers to credit card payments
・Starting with this B2B payment service, aiming to expand the Fintech Financial business
Point 1

(DG invoice card payment)

Domestic B2B market is approximately 100 trillion
JPY which is three times of the B2C market※1①Issue invoices

Point 2B2B payment services are expected to grow due to Seller companies
increase in digitization of B2B transactions as a
③Advanced
result of regulatory changes such as the qualified
payment
invoice system
Point 3
Starting from this service, develop more B2B
Fintech services※1 “e-Commerce Market Survey”, Ministry of Economy, Trade and Industry※2 Plan to expand the card brands

Buyer companies②Credit card
Payments※2④Withdrawal

Payment process
Money transfer

Capital and business alliance
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

23

Capital and Business Alliance with Resona Holdings
・Signed a capital and business alliance agreement with Resona Holdings, which has a strong
customer base of small and medium-sized businesses
・Promoting Marketing/DX business and Fintech Financial business by utilizing the assets of bothcompanies

Copyright © 2022 Digital Garage, Inc. All Rights Reserved

24Initiatives to Accelerate “DG FinTech Shift” Strategy
Aiming to promote and accelerate DG FinTech shift strategy by co-creating businesses with strategic
partners utilizing their assets＜ Partner companies＞＜ Co-creative businesses/initiatives＞
 Payment methods expansion/sales(Tabelog order)
reinforcement
 Payment service for the specific industries
 Initiatives for security enhancement① Payment platform② Marketing/DX
business③ Fintech Financial
business

POS data/
Nationwide networkof sales/maintenance

Solid SMB customer
base/Bank services

Solid customer base/Merchant’s network

 Industry specialized DX/E-Commerce
services Retail media utilizing data Digital advertising in the post-cookie era

TBD B2B financial services(DGFT Invoice Card Payment) Credit scoring model utilizing data Financial/payment services utilizing blockchain

Copyright © 2022 Digital Garage, Inc. All Rights Reserved25

Progress of DG FinTech Shift
Organization

Feb. 2021

Announced group strategy ofMerged two payment related subsidiaries intoNewbusiness

Jun

Strategic subsidiary Crypto Garage registered as Japan’s first B2B-only
crypto asset exchange service provider

Organization

Sep

Acquired India’s financial system development company (DG FutureTech India) as a
new financial hub

Newbusiness

Sep

Started an electronic contract centralized management service
to support the real estate industry’s digital transformation

Alliance

Oct

At the same time as a capital and business alliance with Nomura Holdings, Inc., abusiness alliance with a group company in the custody business

Alliance

Dec

Capital and business alliance with Toshiba Tec Corporation, which had alreadycollaborated to establish JVAlliance

Feb. 2022

New
business

Mar

Started business of online ordering service
JCB Co., Ltd./Toshiba Tec CorporationNewbusinessJul

Started a collaboration throughToshiba Tec CorporationNewbusiness

Oct Started a B2B payment service

NEW

NEW Alliance※NEW: Updated in FY23.3 2Q

Capital and business alliance with JCB Co., Ltd., a long-term leading partner in thepayment business(Tabelog order)

in collaboration with
with Kakaku.com, Inc. and(DGFT Invoice Card Payment)

together with JCB

Nov Signed a capital and business alliance agreement with Resona Holdings
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

26

DG FinTech ShiftⅡ

Implementation of Next-Generation Technologies and ESG

Copyright © 2022 Digital Garage, Inc. All Rights Reserved27

Blockchain and Next-Generation New Businesses (Non-linear Growth Businesses)
Creating new businesses with “Crypto Garage”, a licensed crypto asset exchange, and “web3 Task
Force”. Promoting startup incubation by developing a web3 global community-1 Licensed crypto asset exchange-2 Launched web3 related cross-functional
projects internally and externally

1. Full-scale launch of B2B cryptocurrency payment
platform

1. web3 Task Force – Expansion of FT/MT business
opportunities

Providing “SETTLENET”, a trading infrastructure among cryptocurrency
business providers.

In addition to existing FT and MT segment business efforts, plan andpropose Fintech projects utilizing blockchain.

2. Co-development of a cryptocurrency businessplatform

2. onlab web3 – Startup incubation program

Aiming to expand business for institutional investors by combining
Crypto Garage’s blockchain technology with Nomura HD’s expertisein the financial sector and its creditworthiness.
Overseas
OTC
business
operator

A global program to support web3 startups expanding from Japan to
the world and vice versa.
onlab web3 held a pitch day on November 4. 8 companies, selectedfrom many applicants, presented on stage.

Domestic
Exchange
Simultaneous
payment on
blockchain

Yat Siu

Joi ItoSputniko!

James Higa

Mentors who lead the industry

Startups on the stage on Pitch Day (Nov 4)
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

28

Lab to Create New Businesses and to Contribute to The Society
Established Digital Architecture Lab led by Joichi Ito, director and co-founder of the company todesign and promote next-generation social architecture brought by AI, web3, and other technologicaladvancements
Purpose

1. Develop a digital architecture that will inspire a new era of human advancement
2. Embrace a sustainable and circular technology development model to enhance well-being
3. Promote inclusive, diverse, and decentralized community
Chief Architect / Advisors■Chief Architect■Advisor

1. Probabilistic computing
Jiro Kokuryo

Professor, Keio University Faculty of
Policy Management, Chair of theJapanese Government Digital Agency
Web 3.0 Research Board

Jun Murai

Joi ItoDirector, Co-founderand Senior Managing
Executive Officer
Chief Architect

Ongoing projects
Develop and provide applications that improve collective intelligence and well-being
with MIT research team of Probabilistic Computing*, a new approach of artificial
intelligence generated from brain and cognitive science research.
* Probabilistic computing is a secure and scalable model with a human brain-like thinking model. It enables data
analysis and computation while protecting privacy.

2. web3 and architecture

Distinguished Professor, Keio University/ Special Advisor to the Cabinet

Build an architecture in the web3 area through holding workshops to implement web3
technologies in various industries and developing technology and systems withpartner companies.

Sputniko!

3. Media and community

Artist / Associate Professor, Tokyo
University of the Arts Department of
DesignOpened "Crypto Cafe & Bar" as a networking hub for the web3 community. Provided
information of new technologies and their social impact through our global conference"THE NEW CONTEXT CONFERENCE" and other media platforms.

※ Please refer to the press release for details. https://www.garage.co.jp/en/pr/release/2022/11/20221104/
Copyright © 2022 Digital Garage, Inc. All Rights Reserved29Introduction of DG’s ESG Initiatives
Social contribution activities to stimulate startup community and to realize a sustainable world
utilizing Digital Architecture Lab and ESG management support for investee companies

1

Support investee companies for sustainable growth
Onlab, the first Japanese seed accelerator program
launched in 2010, has supported over 140 startups.
DG aims to build a sustainable society by providing
programs to startups to enhance their ESG managementaligned with global standards.

ESG management lecture program

2

E

ESG ✖ Startup Incubation
Corporate valueenhancement

S

ESGs Director
Corporate Officer
Debbie AltomonteSustainablegrowththrough ESG
management

Customer/talent/
investor acquiring

ESG Meetup with Nordic experts

Work with the global community as part of the Earthshot project
Copyright © 2022 Digital Garage, Inc. All Rights Reserved30Segment Performance Review

Copyright © 2022 Digital Garage, Inc. All Rights Reserved31Overview of Business Segments
The Four Segments that make uplaunched last year

FINANCIAL TECHNOLOGY SEGMENT
Provides a diversity of comprehensive payment platforms as one of Japan’s largest
payment system providers supporting social infrastructure
MARKETING TECHNOLOGY SEGMENT
Develops comprehensive digital marketing solutions and data marketing businesses
utilizing various data
INCUBATION TECHNOLOGY SEGMENT
Invests in, incubates, and collaborates with entrepreneurs and startups mainly intechnology and Fintech sectors
LONG-TERM INCUBATION SEGMENT
Nurtures new businesses through long-term and continuous incubation

Copyright © 2022 Digital Garage, Inc. All Rights Reserved

32Segment

Segment Overview

Performance

FY22.3 2Q Cum.

FY23.3 2Q Cum.

YoY Inc./Dec.

YoY % Chg

Segment Revenue

5,191 M JPY

5,618 M JPY+428 M JPY+8.2%

Segment Profit before tax

2,228 M JPY

2,430 M JPY+202 M JPY+9.1%

Note) Revenue is external revenue. Profit before tax is before intersegment eliminations.

➤ DG Financial Technology, Inc.

Major Group Companies /Businesses

Japan's leading payment service provider➤ NaviPlus Co., Ltd.

Subsidiary of DG Financial Technology, Inc. Provides SaaS business for value- added
services for EC, such as recommendation and search engines➤ Scudetto Corporation

Provides fraud detection/prevention solutions, marketing solutions, etc.

➤ TD Payment Corporation （49％ stake／equity method）

JV with Toshiba Tec Corporation. Deploys multi-payment solutions for POS systems➤ ANA Digital Gate, Inc.（49％ stake／equity method）

JV with All Nippon Airways Trading Co., Ltd. Develops and provides new payment
solutions using Fintech➤ SCORE Co., Ltd. （49％ stake／equity method）

JV with Nissen Co., Ltd. Develops post-payment settlement business and various financial
businesses utilizing settlement data
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

33

Segment

Redefining Management Indicators as “DG FinTech Shift” accelerates

・Redefining Management Indicators in line with business strategy from 1Q as “DG FinTech Shift” accelerates

BackgroundMajorchanges・Unify management indicators following the business integration of two main settlement subsidiaries
・Disclose results of strategic alliances more quantitatively① Unify the definition of the number of transactions to “the number of purchases”② Change the classification of settlement transaction volume to non-face-to-face/face-to-face③ Disclose settlement transaction volume and the number of settlement transactions , including ones acquired
through alliances

CategoryNewclassification

Revenue

Settlement
Transaction
VolumeClassification

Items includedPSPbusiness

Settlement fee／Basic monthly fee, Settlement fee revenue from OEM offerings, Fees foraccount transfer, post-settlement payment, fraud detection, remittance service, etc.,
Revenue from contracted development, Revenue from investments accounted for using
equity method

EC/DXbusiness

Revenue of NaviPlus Co., Ltd.

Non-faceto-faceE-commerce (non-face-to-face) settlements, including volume provided by OEMs

Face-toface

Settlements at real retail stores (face-to-face), including ones handled through OEM
offerings and joint ventures
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

34

Segment

Segment Performance (2Q Cumulative)

・Revenue and profit before tax continued to grow with 8.2% YoY increase in revenue and 9.1% YoY increase in profit before tax.
・Business performance remained strong with growth in transaction volume in both non-face-to-face and face-to-face areas.

Segment Revenue
EC/DX business
PSP business

4,287
392

3,895

4,749
405

4,343

5,191
450

4,741

Segment Profit before tax（Unit：M JPY）
YoY
5,618 +8.2%

476

+5.8%

5,143

+8.5%

FY20.3 2Q Cum.FY21.3 2Q Cum.FY22.3 2Q Cum.FY23.3 2Q Cum.

（Unit：M JPY）
YoY

2,173

2,101

2,228

2,430

+9.1%

FY20.3 2Q Cum. FY21.3 2Q Cum. FY22.3 2Q Cum. FY23.3 2Q Cum.
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

35

Segment

Quarterly Segment Revenue

・Quarterly revenues remained strong due to increased settlement transaction volume.
・2Q (Jul. – Sep.) Segment Profit before tax grew by 16.8% YoY, a double-digit growth.
（Unit：100 M JPY）

YoY

EC/DX business
PSP business

2,675

Segment Revenue
2,083

194

1,889

2,340

2,204

2,184

2,138

198

192

192

2,006

1,992

202

2,138

2,409

204

2,205

2,525

213

2,312

2,392

219

2,173

2,516

225

2,291

225

2,450

2,814

228

2,586

2,757

2,721

234

238

2,524

2,898

+8.3%

238

+5.8%

2,660

+8.6%

2,483

1,946

Segment Profit before tax

1,061

1,112

1Q

2Q

1,129
746

3Q
FY20.3

4Q

1,018

1,083

1,141

1Q

2Q

3Q
FY21.3

875

4Q

1,108

1,120

1Q

2Q

1,264

3Q
FY22.3

1,057

1,121

4Q

1Q

1,309

+16.8%

2Q
FY23.3Copyright © 2022 Digital Garage, Inc. All Rights Reserved

36Segment

Trends in Settlement Transaction Volume

・Face-to-face settlement continues to grow at a high rate, and market penetration continues to expand steadily.
・Non-face-to-face settlement remains strong despite a rebound in Covid demand.
（Unit：100 M JPY）
Face-to-face settlement

12,133

Non-face-to-face settlement

10,545

10,482
9,768

8,962
7,281
6,278
485

6,660

8,124

8,333

692

1,091

1,794
1,688

1Q

2Q

2,902

3,123

+40.7%

11,585

2,549

2,219

1,476

8,752
6,126

2,746

12,424

586

534

5,793

1,960

10,14812,368YoY+22.4%

6,695

3Q
FY20.3

7,432

7,242

7,486

4Q

1Q

2Q

3Q
FY21.3

8,080

4Q

8,522

1Q

9,387

9,036

9,466

9,301

3Q

4Q

1Q

2Q

7,929

2Q
FY22.3+17.3%

FY23.3Copyright © 2022 Digital Garage, Inc. All Rights Reserved37

Segment

Trends in Number of Settlement Transaction

・The number of settlement transactions continued to grow by 22.5% YoY.
・Data volume of settlement transactions continued to grow, expanding Fintech Financial business base.
（Unit：M Transactions）
Face-to-face settlement
Non-face-to-face settlement

213
197
170
148
130

78
4
75

1Q

96
5

90
4

108
13

26

85

90

95

104

2Q

3Q

4Q

1Q

FY20.3

42

36

112

2Q

127

3Q
FY21.3

167
44

211

181
54

73

64

75

95

+49.5%

222

86

123

127

133

140

136

135

4Q

1Q

2Q

3Q

4Q

1Q

FY22.3242

YoY+22.5%

146

+9.6%

2Q
FY23.3Copyright © 2022 Digital Garage, Inc. All Rights Reserved38

Segment

Transaction Volume Analysis of Increase/Decrease by Sector

・Travel, amusement, and food service-related transactions increased as corona restrictions were relaxed.
・Transaction volume in C2C marketplace, equities/futures and other transactions decreased due to a drop in
demand for stay-at-home consumption.
（Unit：100 M JPY）※% compared to FY22.3 2Q Cumulative

GeneralRetail+39.9%

Eatingout
Amusement+78.9%
Facility+84.3%

PublicFund+17.7%

C2C
Hobby Market Place+12.3%-57.7%

Other

24,792Equities/Futures-13.6%

Travel+153.1%

20,630FY22.3 2Q
Cum.

FY23.3 2Q
Cum.
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

39

Segment

Transaction volume by Sector

・Travel and entertainment facilities in the service sector recovered, driving settlement transaction volume.
・Partner sales through alliance strategies were successful in the merchandising sector, and transactions expanded mainly inretail.

12,133
10,545

10,482
9,768

8,124

6,278

6,660

8,333

12,36812,424

11,585

YoY+22.4%+29.7%

10,148

8,962

+8.0%

7,281

OthersMerchandising+37.3%

Services
1Q

2Q

3Q
FY20.3

4Q

1Q

2Q

3Q
FY21.3

4Q

1Q

2Q

3Q
FY22.3

4Q

1Q

2Q
FY23.3Copyright © 2022 Digital Garage, Inc. All Rights Reserved40Segment

Transaction volume by Sector - Merchandising

・The alliance strategy worked successfully in the merchandising sector, and the transaction volume of general retailers increased.
・The reactionary decline from the special demand for stay-at-home consumption in home appliances and furniture ran its course, while the share of
fashion products handled expanded steadily.

General retail

FashionHome Appliances and Furniture Interiors
Stay-at-home
special demand

Growing
industries

Reactionary
declineIncreasing share withalliance strategy

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
FY20.3

FY21.3

FY22.3

FY23.31Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
FY20.3

FY21.3

FY22.3

FY23.31Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
FY20.3

FY21.3

FY22.3

FY23.3Copyright © 2022 Digital Garage, Inc. All Rights Reserved

41

Segment

Transaction volume by Sector - Services

・Service-related payment transaction volume grew at the foot of the market due to the recovery from the COVID in travel and entertainment facilities.
・Travel-related business is expected to see further recovery in existing clients due to the easing of travel restrictions and the start of nationwide travel
support.

Settlement Transaction Volume in Services

Measures toPrevent the
Spread of
disease
1/7－3/21

State of
Emergency
Declaration
4/23－6/21
State of
Emergency
Declaration
4/7－5/25

State of
Emergency
Declaration
1/7－3/21

YoY

State of
Emergency
Declaration
7/12－9/30

Amusement facilities/
Ticket stores+138.3%

Travel

1Q

2Q

3Q

FY20.3

4Q

1Q

2Q

3Q

FY21.3

4Q

1Q

2Q

3Q

FY22.3

4Q

1Q+93.4%

2Q

FY23.3Copyright © 2022 Digital Garage, Inc. All Rights Reserved

42Segment

Inbound-related Settlement

・Inbound-related settlements, which had highly contributed to business performance, remain less than 10% of the pre-Covid level.
・Large potential for future recovery and expansion following the lifting of entry restrictions and easing of travel restrictions inforeign countries.

Face-to-face Settlement Transaction Volume
FT’s inbound-related settlements are down 90%
from the pre-Covid level.
17

Number of Visitor Arrivals to Japan
35
31

Over 300 B JPY per year

22

Inbound-related QR code settlement

Government Goals

15

Other face-to-face settlement
21

60 M visitors

23
24

2019
Visitor Arrivals
to Japan

17（Unit：100 M JPY）
13

306
1Q

287

292

2Q

3Q

FY20.3

FT’s Potential Transaction Volume of Inboundrelated Settlement

31 M

159

2021

0.24 M visitors
4Q

1Q

2Q

3Q

FY21.3

4Q

1Q

2Q

3Q

FY22.3

4Q

1Q

2Q

FY23.3

Source) “Visitor Arrivals to Japan", Japan National Tourism Organization
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

43

Segment

Expansion through Alliance Strategy

Collaborate with the alliance companies to develop products to match needs of various types ofmerchants.
Face-to-face settlement market
Accelerate the provision of multi-payment solution/systems forlarge-scale stores with Toshiba Tec, the domestic top sharecompany providing POS systems and our capital alliance partner.
Established JV (TD Payment) to propel the business

Large

Merchant size

Provide multi-payment solutions/systems together through JV withANA Group. Mainly continue to capture consumption of shops andrestaurants in airports, travel industry and tourists to Japan

AirPAY

Recruit
Provide a QR code payment solution for AirPAY operated by
Recruit Co., Ltd.

14 big players
of QR payments

Small

Operate DG product of Cloud Pay. Introducing to small-scale
stores as an MPM-type payment which is a consortium-type multiQR solutions that integrate various QR code payments into one QR
code※MPM (Merchant Presented Mode): Method in which consumers scan QR codes displayed at stores with their smartphones to make payments
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

44

Segment

Increasing Share with Alliance Strategy

・Alliance strategy in a face-to-face settlement worked successfully, continuing high growth insettlement transaction volume in each area.

Face-to-Face Settlement Transaction Volume
6,025（Unit：100 M JPY）

3,123
2,902

2,746
2,549

3 Year CAGR
2,219
80.8% 1,960
1,794

1,688

1,476

Size ofMerchants

YoY(2Q Cum.)

Large＋41.7%

Small to Mid＋55.1%

Small+33.0%

1,091

1,019
485

1Q

534

2Q

586

3Q

FY20.3

692

4Q

1Q

2Q

3Q

FY21.3

4Q

1Q

2Q

3Q

FY22.3

4Q

1Q

2Q

FY23.3Copyright © 2022 Digital Garage, Inc. All Rights Reserved

45

Segment

New System Strategy Associated with Business Integration of Two
Major Payment Companies

・As a government-designated critical infrastructure operator, thoroughly investing in stable
operation and security 24 hours a day, 365 days a year.
・Strengthen system to minimize downtime risk due to unforeseen failures, etc.
Strengthen systems

Expanding operation center• Japan's first introduction of state-of-the-art technology
used in highly public areas such as finance andtransportation as a regular payment system• Expanding hubs to respond to the increase andcomplexity of operations in anticipation of future growth inpayment transaction volume• Non-disruptive system operation with two-way real-time
replication/redundant database in active configuration• Thoroughly improve the reliability of the disaster recovery
systemData center

・Real-time replication
・Active configuration• Minimize manned response 24 hours a day, 365 days ayear by introducing technologies such as RPA (Robotic
Process Automation)
Operation center2 hubs structure

ORACLEEXADATA

Monitoring center
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

46

Segment

Capital Expenditures and Depreciation

・Continues to invest in systems to ensure stable 24/365 operation and improve robustness of security.
・Depreciation is expected to normalize around year 2025 with efficiency gains from system integration.
（Unit：M JPY）
746

Capital Expenditures

605

Depreciation

416

410
348

354

328

277

348

258

187

191

195

204

1Q

2Q

3Q

4Q

FY20.3

232

1Q

253

260

273

280

2Q

3Q

4Q

1Q

FY21.3

358

337
292

2Q

314

299

FY22.3

310

314

318

309

3Q

4Q

1Q

2Q
FY23.3Copyright © 2022 Digital Garage, Inc. All Rights Reserved

47

Costs・Marginal Profit Ratio

Segment

・Fixed costs are on an increase trend due to system-related depreciation and operational redundancy.
・Marginal profit is expected to remain at a current level.
88.6%

88.1%

91.2%
81.1%

85.2%

87.2%

86.5%

84.4%

87.4%

84.6%

87.6%

（Unit：M JPY）
83.3%

86.9%

87.6%

356

361

Marginal Profit Ratio
Variable costs
Fixed costs

238

404

263

346

308

342

374

316

412

349

460

193

783

829

862

1Q
1Q

2Q
2Q

3Q
3Q

FY20.3
20.3期

988

976

1,018

1,042

4Q
4Q

1Q
1Q

2Q
2Q

3Q
3Q

FY21.3
21.3期

1,143

1,093

1,142

1,201

1,241

1,244

1,228

4Q
4Q

1Q
1Q

2Q
2Q

3Q
3Q

4Q
4Q

1Q
1Q

2Q
2Q

FY22.322.3期

FY23.323.3期

Copyright © 2022 Digital Garage, Inc. All Rights Reserved48

Segment

Market size and its growth outlook for Settlement business for consumers (toC)

Cashless settlement market is expected to continue to grow at a high rate for both non-face-to-faceand face-to-face settlements.
Continue to promote cashless in this market, expand merchant network assets, and drive Fintech businessPrivate final
consumption
expenditure

305（Unit：T JPY）

289

Government Goals
Ratio of Cashless
Settlements
Up to 80％

Room forCashless(Cash payment,
etc.)

EC Settlement Market
Face-to-face Cashless
Settlement Market
'18

'19

21

23

27

31

36

40

65

72

79

86

92

99

'20

'21

'22 (Fcst.)'23 (Fcst.)'24 (Fcst.)'25 (Fcst.)'26 -Estimated by the Company based on the following data
“System of National Accounts for 2021”, Cabinet Office / “Domestic Cashless Settlement Market 2022”, Yano Research Institute / “Cashless Roadmap 2022”, Ministry of Economy, Trade and Industry/ “Results of FY2021 E-Commerce Market Survey Compiled”, Ministry of Economy, Trade and Industry / “Current Status and Outlook of the Internet Settlement Services Market in EC, FY2022
Edition”, Deloitte Tohmatsu MIC Research InstituteCopyright © 2022 Digital Garage, Inc. All Rights Reserved49

Segment

Segment Overview

Performance

FY22.3 2Q Cum. FY23.3 2Q Cum.
Segment Revenue
Segment Profit before tax

YoY Inc./Dec.

YoY % Chg

6,314 M JPY

5,775 M JPY-540 M JPY-8.5%

431 M JPY

372 M JPY

-58 M JPY

-13.5%Note) Revenue is external revenue. Profit before tax is before intersegment eliminations.

Major Group Companies /Businesses➤ Marketing Technology Company

Supports client’s business through performance-based ads,
web marketing, CRM marketing, and DX businesses➤ DG Communications Co., Ltd.
Develops real estate advertising business➤ BI.Garage, Inc.

Contextual ads business and media consortium business➤ CyberBuzz, Inc.（20％ stake／equity method）Ticker : 7069

Provides the social media marketing platform structured with influencers
as its center part

Copyright © 2022 Digital Garage, Inc. All Rights Reserved50Segment

Segment Performance (2Q Cumulative)

・Although there was a reactionary decline from the large-scale projects recorded in the real estate advertising domain in FY22.3
1Q, the digital advertising business performed solidly, especially in the financial domain, where we have strengths in thesettlement business.

Segment Revenue

Segment Profit before tax（Unit：M JPY）
CRM, etc.

7,360

Real Estate

6,591
2,027
2,426

6,314
1,568

Digital Ads

5,775
1,406

YoY
-8.5%
-10.4%

1,004

3,345
2,277

1,988

（Unit：M JPY）

1,889

2,462

2,283

2,211

2,158

FY20.3 2Q Cum. FY21.3 2Q Cum. FY22.3 2Q Cum. FY23.3 2Q Cum.

YoY

-10.2%

-5.5%

431
256

372

-13.5%

FY20.3 2Q Cum. FY21.3 2Q Cum. FY22.3 2Q Cum. FY23.3 2Q Cum.
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

51

Segment

Quarterly Segment Revenue

・Digital advertising, the mainstay of the company's business, performed well and is on track for the full year.
・Real estate advertising business remained sluggish, affected by market conditions due to the COVID.
（Unit：M JPY）

CRM, etc.
Real Estate
Digital Ads

YoY

4,311

3,984
3,705
3,376
640

1,386

1,747

3,335

1,572

1,529

3,217
2,958

1,445

1,773

3,257

1,105
981

968

769

771

1,309

1,086

962

1,026

1,071

1,093

922

967

1,102

1Q

2Q

3Q

4Q

1Q

2Q

3Q

FY20.3

877

1,335

1,470

3,618

3,499

FY21.3

3,098

3,087

800

926

1,092

1,157

1,287

1,143

1,141

978

4Q

1Q

2Q

3Q

1,182

FY22.3

-8.1%

728

-8.9%

1,163

1,048

-9.4%

1,087

1,071

-6.1%

1Q

2Q

678
1,223

1,305

2,848

2,927

1,302

4Q

FY23.3Copyright © 2022 Digital Garage, Inc. All Rights Reserved52

Segment

Quarterly Advertising Volume

・Digital ads are recovering from the budgetary austerity of companies placing ads in the COVID disaster.
・Expanding business in the financial sector, where MT has a high market share.

Real estate
Smartphone/App
Digital Ads
Cosmetics/HR
Financial
8,230
2,250

1,701

1,723

8,519
2,091

2,072

1,810

2,556

2,547

1Q

2Q

8,397
1,918

1,592

（Unit：M JPY）

9,727

1,728
8,259

2,069
7,305
1,321

2,324

1,765

1,275
1,119
1,743

1,768

1,377
1,631

8,440

3Q
FY20.3

4,013

4Q

9,737

1,460

2,009

1,401
1,476

2,106

1,220
1,762

1,622

3,487

3,534

1Q

2Q

3Q
FY21.3

8,296

1,960

9,585

-0.5%

1,499

-7.5%

883

-31.4%

2,303

-1.7%

4,899

+11.7%

1,608
1,288

1,767
812

2,344

855
2,411

904
2,039

1,791

2,029

3,167

9,838

9,637

9,003

5,731
3,117

YoY

11,024

4Q

4,746

4,384

1Q

2Q

3,926

3Q
FY22.3

4,612

4,452

4Q

1Q

2Q
FY23.3Copyright © 2022 Digital Garage, Inc. All Rights Reserved

53

Segment

Segment Overview

Performance

FY22.3 2Q Cum. FY23.3 2Q Cum.

YoY Inc./Dec.

YoY % Chg

61,493 M JPY

79,769 M JPY+18,276 M JPY+29.7%

Amount Sold

3,235 M JPY

642 M JPY

-2,593 M JPY-

Amount Invested

4,332 M JPY

1,607 M JPY-2,725 M JPY-

Operational Investment Securities➤ DG Ventures Inc.

Major Group Companies /Businesses

Invests in and incubates cutting-edge internet startups➤ Open Network Lab（Program）
Seed Accelerator Program➤ DG Incubation, Inc.

Supports startups that challenge the world
through incubation and fund management➤ DG Daiwa Ventures, Inc.（50％ stake／equity method）
Manages DG Lab Fund to invest in startups
with next-generation technologies➤ Digital Garage US, Inc.
The US-based global strategy headquarters
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

54

Segment

Segment Performance (End of Sep. 2022)

・Despite the write-down of Blockstream's fair value, the fair value at the end of September was 79.8 B JPY (+2.3% vs. the end of
FY22.3) due to the impact of the strong dollar.
Balance of Operational investment securities（Breakdown by Currency）（Unit：M JPY）
Others

79,769

INR

5,969

JPY
USD

61,493
2,126
10,861

40,585
1,501
10,05747,957

FY22.3 2Q

Europe0.2%

Others13.5%

14,033
Japan

North America

17.8%
58,869

46.6%

Asia

21.9%

28,233

FY21.3 2Q

Portfolio by Region

FY23.3 2Q
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

55

Segment

Trends in Fair Value of Investees

・Built a global portfolio focusing on the U.S., Asia, and Japan. Achieved sustainable growth in fairvalue through diversification of investments in each growth stage.

（Unit：100 M JPY）

4.2 x

780
615

190

219

242

267

278

1Q

2Q

3Q

4Q

1Q

FY19.3

331

351

365

2Q

3Q

4Q

FY20.3

363

1Q

406

2Q

438

3Q

FY21.3

472

4Q

866

798

667

508

1Q

2Q

3Q

FY22.3

4Q

1Q

2Q

FY23.3Copyright © 2022 Digital Garage, Inc. All Rights Reserved

56

Segment

Examples of Investments

・Fintech/DX promising portfolio companies in the With Corona era grew in Asia, Japan, North America, and other areas. Steadyprogress was made in fundraising, listing, and exit of investees.

DG Group's Fintech business collaboration projects

Asia
Droom
[India]Operates Droom, India's largest automotive buying and selling
online marketplace

NoBroker Technologies
Solutions[India]Operates India’s peer-to-peer property marketplace. Users canrent/buy houses online without brokers

Expedient Healthcare
Marketing[India]Operates medical web service “Healthians.com,” which offers
online booking for health checkups at clinics, related informationfrom doctors/experts, etc.

Ralali[Indonesia]

Operates BtoB marketplace for office appliances, etc.

GoTo Group[Indonesia]

Indonesian technology company formed in a merger between ridehailing giant Gojek and e-commerce platform TokopediaJapan
AGE technologies[Japan]A member of the 18th Open Network Lab Seed Accelerator
Program. Provides "Souzoku.com," a service that completes
various procedures occurring at the time of inheritance on theInternet.

North America・Europe
MX Technologies[US]
Offers a PFM (personal financial management) tool for financial
institutions in the US

THIRD[Japan]Helium Systems[US]

Provides cost reduction consulting services for construction,
machinery, and electrical work, and AI-based real estate
management platform “Kanri Roid”

Operates IoT business through smart sensor devices that can beprovided at low cost

Pocket Change[Japan]Blockstream[US]

Provides "pocket change" service for collection, redemption, andexchange of foreign coins, linked to electronic money and point services

Develops Sidechain, a technology for using Blockchain, Bitcoin's
core technology, in various applications* % stake includes investment securities held by Digital Garage, Inc.

GOYOH
[Japan]Pie Systems[Denmark]

Develops and operates IT services for real estate, commercial andresidential properties in Japan and abroad. Develops EaSyGo, a realestate tech service that increases real estate value through stakeholder
ESG behavior change

Develops mobile app that automatizes refund workflow forinternational VAT (Value-Added Tax) and bypasses airport kiosk

Copyright © 2022 Digital Garage, Inc. All Rights Reserved

57

Segment

Segment Overview

Performance

FY22.3 2Q Cum. FY23.3 2Q Cum.

YoY Inc./Dec.

YoY % Chg

Segment Revenue

2,028 M JPY

2,426 M JPY+399 M JPY+19.7%

Segment Profit before tax

1,078 M JPY

1,293 M JPY+215 M JPY+19.9%Note) Revenue is external revenue. Profit before tax is before intersegment eliminations.

➤ Kakaku.com, Inc. （20％ stake／equity method） Ticker : 2371

Major Group Companies /Businesses

Operates purchase support service Kakaku.com, restaurant review andrestaurant service Tabelog, and New Media and Solutions➤ Crypto Garage, Inc.

Promotes development of advanced financial services utilizing blockchain
technology and cryptography technology with Tokyo Tanshi Co., Ltd., and Nomura Holdings, Inc.

➤ Brainscan Technologies, Inc.
MRI business for drivers➤ Musubell business

Develops and provides "Musubell," a system to promote DX of contracting andoperations in the real estate industry

other➤ Academie Du Vin Co., Ltd.

Runs wine school and wine sales business and develops EC business➤ Welby Inc. （19％ stake／equity method ） Ticker : 4438

Develops medical record business, disease solution business, and medical data researchbusiness
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

58

Segment

Segment Performance (2Q Cumulative)・Performance recovered mainly in Kakaku.com’s Tabelog business as demand for eating out began to recover.
・Core revenue, excluding one-time factors and discontinued operations, has recovered to the pre-Covid level.

Segment Revenue（Unit：M JPY）

3,928

Discontinued operation (NCS※)
Other
Investment profit on equity method

691
2,105
653

1,810

（Unit：M JPY）

One-time revenue

642

786

Segment Profit before tax

2,028
127

2,426

+19.7%

803

+8.5%

YoY

2,426

740

546
907

YoY

1,161

1,624

FY20.3 2Q Cum. FY21.3 2Q Cum. FY22.3 2Q Cum. FY23.3 2Q Cum.

+39.9%

1,078

1,293

+19.9%

605
FY20.3 2Q Cum. FY21.3 2Q Cum. FY22.3 2Q Cum. FY23.3 2Q Cum.

※ Transferred all operations of New Context Services, Inc. in FY21.3.
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

59

Segment

Quarterly Segment Revenue

・Although the activity restrictions of the Corona disaster mainly affected investment profit on equity method from Kakaku.com,
core revenue, excluding one-time factors and discontinued operations, has stabilized under the current circumstances.
（Unit：M JPY）
2,232

2,257

642

642

346

382

1,696
345

404

1,744

1,647
359

1,305
312

349
801

289

947

986

906

176

Investment profit on equity method
1,103

370

170

127

316

349

994

422

1,146
345

1,246
405

1,181
398

+18.8%
+1.7%

391
984

914
623

YoY

1,406

1,034

444

341
863

NCS
Other

355

403

One-time revenue

2,178

589

558

603

4Q

1Q

2Q

801

841

783

4Q

1Q

2Q

+29.9%

284
1Q

2Q

3Q
FY20.3

4Q

1Q

2Q

3Q
FY21.33Q
FY22.3

FY23.3Copyright © 2022 Digital Garage, Inc. All Rights Reserved

60

Segment

Kakaku.com, Inc. Performance

Source) "Results Briefing for the Second Quarter of the Fiscal Year ending March 31, 2023", Kakaku.com, Inc.

Kakaku.com, Inc. Quarterly Revenue by Business
Kakaku.com（Unit：M JPY）

Tabelog
New Media and Solutions/Finance

16,023

14,053

13,3095,933

12,243

12,021

6,130

5,474

5,417

5,958

5,308
4,187

3,754

1,809

2,277

1Q

2Q

3Q
FY21.3

4,686

4,957

-8.4%

4,253

5,448

5,373

+52.8%

3,565

1,735
2,718

5,566

+19.9%

5,114

7,371
4,493

14,22514,015

11,861
5,320

9,502

13,787

YoY

2,991

2,850

3,182

3,426

3,968

3,685

4,091

4Q

1Q

2Q

3Q

4Q

1Q

2Q

FY22.3+28.6%

FY23.3Copyright © 2022 Digital Garage, Inc. All Rights Reserved

61

Financial Information

Copyright © 2022 Digital Garage, Inc. All Rights Reserved62Consolidated P/L（IFRS）
FY22.3

FY21.3

FY23.3

YonY (2Q)
Increas/Decrease

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

6,944

12,3209,447

11,767

10,84329,266

12,77920,067

17,734-3,170

6,148

6,301

6,138

6,357

6,004

6,068

6,226

6,532

6,002

6,144

Revenue in operational investment
securities

302

4,968

2,226

3,535

3,893

9,834

4,378

10,1637,534-7,301Other income

193

207

214

1,335

326

223

202

202

159

176

Finance income

1

0

17

40

18

11,382

513

1,247

2,131

-1,090+2,113 -109.6%

300

843

853

499

600

1,758

1,461

1,923

1,907

-1,099+1,307 -162.5%

6,539

6,689

6,123

6,811

5,969

6,715

6,526

8,352

6,530

14,676+561 +118.6%

Cost of sales

2,764

2,829

2,459

2,645

2,531

2,617

2,662

2,703

2,622

2,495

+91

-4.6%

Selling, general and administrative
expenses

3,453

3,588

3,400

4,095

3,304

3,831

3,696

3,988

3,758

4,112

+454

+7.3%

Other expenses

69

109

69

370

72

117

99

1,594

80

87

+8

-25.1%

Finance costs

252

163

195

-299

62

151

69

68

70

7,982

+8 +5191.9%

Profit before tax

405

5,632

3,324

4,956

4,874

22,551

6,253

11,715

11,204-17,846+6,330 -179.1%

Profit attributable to owners of parent

224

3,779

2,290

3,493

3,343

15,152

4,305

7,529

7,467

-11,818+4,124 -178.0%

JPY in Millions

Revenue
Revenue in recurring business

Share of profit of investments accounted
for using equity method

Expenses％ Change-32,436 -110.8%
-3

+1.2%

+3,641 -174.2%-167-20.9%

Copyright © 2022 Digital Garage, Inc. All Rights Reserved

63

Segment P/L（IFRS）
FY21.3

FY22.3

FY23.3

YonY (2Q)
Increas/Decrease

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

6,944

12,3209,447

11,767

10,84329,266

12,77920,067

17,734-3,170Financial Technology

2,340

2,409

2,525

2,392

2,516

2,675

2,814

2,757

2,721

2,898

+223

+8.3%

Marketing Technology

3,335

3,257

2,958

3,499

3,217

3,098

3,087

3,618

2,927

2,848

-250

-8.1%

Incubation Technology

389

5,269

2,225

3,599

4,015

12,214

5,008

11,5498,937-8,949Long-term Incubation

801

1,305

1,646

2,179

1,034

994

1,406

1,146

1,246

1,181

Others/Adjustments and Eliminations

79

81

94

97

61

10,286

465

996

1,903

-1,147-11,434 -111.2%

405

5,632

3,324

4,956

4,874

22,551

6,253

11,715

11,204-17,846-40,397 -179.1%

Financial Technology

1,018

1,083

1,141

875

1,108

1,120

1,264

1,057

1,121

1,309

+189

+16.8%

Marketing Technology

178

78

202

276

248

183

150

442

101

272

+89

+48.8%

Incubation Technology

72

4,916

1,861

3,415

3,636

11,886

4,593

11,1008,480-9,443Long-term Incubation

120

485

843

1,205

574

504

813

-639

684

609

Others/Adjustments and Eliminations

-983

-931

-724

-815

-692

8,858

-567

-244

818

-10,593

JPY in Millions

Revenue

Profit before tax％ Change-32,436 -110.8%-21,162 -173.3%+187+18.8%-21,330 -179.4%+105+20.8%-19,450 -219.6%

Copyright © 2022 Digital Garage, Inc. All Rights Reserved64Consolidated BS（IFRS）
JPY in Millions

End of
FY22.3End of
FY22.6

Increas/Decrease

Current assets

147,642

157,418+9,776

Cash and cash equivalents

43,41555,705+12,290

Trade and other receivables

24,462

19,976-4,486

FT business-related items

Operational investment securities
Non-current assets

77,95083,96579,76975,268+1,820-8,697

Change in fair value of investee companies

Property, plant and equipment

18,423

17,844-579

Intangible assets

4,194

4,344

+151

Investments accounted for using equity method

27,80827,745-64

Other financial assets
Total assets

23,317
231,607

14,526
232,686-8,791+1,079Current liabilities

59,242

94,237+34,996

Borrowings

9,223

37,556+28,333

Trade and other payables
Non-current liabilities

43,90075,14951,613
46,417+7,713-28,732

Bonds and borrowings

40,71015,594-25,116

Other financial liabilities

10,683

9,877

-805

Deferred tax liabilities
Total liabilities

22,001
134,390

19,190140,654-2,811+6,263

Total equity attributable to owners of parent

95,73890,186-5,552

Share capital

7,692

7,818

+126

Capital surplus

6,147

6,226

+80

Treasury shares-1,409-1,293+116

Other components of equity

2,273

2,344

+71

Retained earnings
Non-controlling interests

81,035
1,479

75,0901,847-5,945+367

Total equity

97,217

92,033-5,185

Reason for change / Remarks

Decrease in fair value of investee companies

Transfer CB to short-term borrowings

Transfer CB from long-term to short-term borrowings

Copyright © 2022 Digital Garage, Inc. All Rights Reserved65

Datasheet

Starting this fiscal year, the information previously disclosed in the“Supplementary Explanatory Material" section will be posted as adatasheet at the Company's website.
URL: https://www.garage.co.jp/en/ir/library/
We continue to enhance information disclosure to provide
information that contributes to investment decisions by ourshareholders and investors.

Copyright © 2022 Digital Garage, Inc. All Rights Reserved66Supplementary Materials

Copyright © 2022 Digital Garage, Inc. All Rights Reserved

67

SegmentIndustry structure of credit card transactions
Contract

Brand membership contract

International brands

VISA/MASTER/AMEX/DINERS/JCB
Pay feeIssue credit cards

Acquirer

Pay feeAcquire and manage merchants
Representative
contract

Purchase goods & services

Payment
agencycontract

DirectPay on behalf（fee deducted））
fee deducted

Payment Service
Provider（Merchant contract）
contract

Pay on behalf（fee cost
deducted）（
Payment

Credit card Payment

Credit card contract

Credit card member
Consumer

Pay fee
Payment

IssuerMoney

Brand membershipcontract

Merchant

E-commerce & In-store businesses

Copyright © 2022 Digital Garage, Inc. All Rights Reserved

68Segment

Business model：Payment Service Provider

A service that acts as an intermediary between e-commerce site operators and face-to-face merchants and payment service
providers such as credit card companies and convenience stores, enabling the introduction of a number of payment methods,
including credit card payment, through a single contract and system.
Electronic message
Money

Consumer

Payment service
providerMerchant

Payment
networks
Credit card companies①Order⑦Offergoods

EC website

Real stores②Settlement
information③Settlement
information⑤ Notify
result④Notify
result⑨Pay theamount lessthe settlement
agent's fees

⑧Pay sales
proceeds
less fees

Bank Payment
Convenience stores Payment
E-money Payment
Telecom Carriers Payment
ID Payment
International Payment
QR Code Payment
BNPL (Buy Now Pay Later)⑥Payment
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

69

Segment

Business model：Contract type

Storage agency type (Representative contract)
Acting as an all-in-one agent for contracting
procedures with various settlement institutions andpayment of sales amounts• Single point of contact for payment• Streamline operations such as payment management andconfirmation

Payment service
providerPayment dataprocessing

Payment dataprocessing

Monthly fee
Pay the amountless thesettlement
agent's fees

Pay sales
proceeds lessfees

Payment
institutions• Monthly sales proceeds are deposited to the merchant in a lump-sum
payment from our company

Merchant• We handle all contracting procedures with payment providers such as
credit card companies and financial institutions

Merchant
contract

Payment data processing type (Direct contract)• Merchants sign contracts directly with credit card companies• Provide the necessary software and transaction management tools• Also provide support for software installation

Electronic
message
Money

Payment service
providerPayment dataprocessing
Monthly fee,
Processing fee

Payment dataprocessing

Merchant contract

Pay sales proceeds less fees

Payment institutions• Provide payment systems and automate card payment processing

Dataprocessing
contract

Merchant

Based on the merchant agreements with credit cardcompanies signed by the merchants, credit card
payment processing is automated through theintroduction of a payment system provided by PSP

Copyright © 2022 Digital Garage, Inc. All Rights Reserved

70Business Model：Cash flow and Posting of revenue

Segment■Cash flow

The settlement agent business (The Company) credits the payment made by purchasers received through credit
card companies, convenience stores, etc. to the merchant stores of e-commerce businesses and storefront
businesses that are its customers.

Customer

Payment forthepurchase

Payment
institutions

Pay the amount lessthe settlement
agent's fee

Pay the purchaseprice less fees

Credit card company,
Convenient store etc.

①

Fee②

Fee③

Merchant

E-commerce&
In-storebusinesses■Posting of revenue
Under IFRS, fees received by the Company are directly recognized as revenue.
Revenue
J-GAAP

Total fees received from
customers ①

COGS

－

Pay fees to settlement
institution ②

Gross Profit
Settlement agency fees
＝ received
by the Company③

Revenue
IFRS

Settlement agency fees
received by the Company③
Copyright © 2022 Digital Garage, Inc. All Rights Reserved

71

Segment

Business Model: Marketing Business・Supporting client business growth through a comprehensive digital marketing service
・Providing solutions utilizing CRM and data, and Fintech solutions which connect with the paymentbusiness
Promoting interest and purchase intent
in all touchpoints with consumers

Clients

Marketing business

Bank/Card
Securities/Payment/Other
financial services

Outsource

RetailOthers (HR/Public
transportation/Hotels/
Travel, etc.)

Customer databasedevelopment and analysis
Application
development

App/Game/E-book/Contents services
Real estate developer

Consumer

Overall internet advertising(Purchase promotion/customer
attraction/brand recognition)

Cosmetic/Consumer goods
manufacturer
E-commerce

Contact points

Work
togetherin DX area

Web media

SNS

Search engine

App

Mass media

Store

Media
development

AI solutions

Competing platforms for GAFA

Joint projects in DX and IT

Copyright © 2022 Digital Garage, Inc. All Rights Reserved

72Market size：Internet advertising market

Segment

・ Internet advertising expenditures surpassed Traditional Media advertising expenditures for the first time, driving the recoveryof Japan’s overall advertising market
・The Internet advertising market is expected to continue to expand in the future.

Trends in Four Traditional media and Internet advertising expenditures
35,000（Unit：100 M JPY）

TelevisionNewspapers
Magazines

30,00027,052

RadioInternet

25,00021,04820,00022,29017,58915,09415,00013,10010,000

5,000

3,777

4,826

6,003

6,983

7,069

2008

2009

7,747

8,062

2010

2011

8,680

9,381

10,51911,594

0
2005

2006

2007

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Source : "Advertising Expenditures in Japan in 2020", Dentsu Inc.
Copyright © 2022 Digital Garage, Inc. All Rights Reserved73

Segment

Global Incubation Stream

・Maximize the global network that DG has built to date to discover and nurture world-class startups.
Global Incubation Stream

Copyright © 2022 Digital Garage, Inc. All Rights Reserved

74Segment

Accelerator Program ”Open Network Lab”

・Developing support programs with different characteristics in line with each stage and area tofurther strengthen support for startups and realize social implementation.
Total Startups

152 startups
Funding Success Rate

58.1 %
Exited Companies

12.5 %

Copyright © 2022 Digital Garage, Inc. All Rights Reserved75

Please note that the business forecasts and strategies covered in today’s presentation are based on our current evaluation and future results may vary significantly depending on unforeseeable
events or circumstances. This announcement is solely for the purpose of the investors relationship and is not for making any solicitation for investment in any securities. This announcement does
not constitute an offer to sell or the solicitation of an offer to buy any securities in the United States or any other jurisdiction in which such offer, solicitation or sale would be unlawful prior toregistration or qualification under the securities laws of any such jurisdiction. Any securities of our consolidated subsidiaries have not been registered under the U.S. Securities Act of 1933, as
amended (the "U.S. Securities Act") and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act.
Any public offering of securities to be made in the United States will be made by means of a prospectus. Such prospectus will contain detailed information about the company making the offer andits management and financial statements.